Guru Organic Energy Corporation has initiated legal proceedings against The Pepsi Bottling Group (Canada), seeking C$15 million (approx. USD $10.99 million) in damages and the recovery of profits tied to a competing product.

The claim, filed with the Ontario Superior Court of Justice, alleges multiple breaches of a distribution agreement between the two companies, including failure to provide adequate shelf space, withholding of inventory and misuse of confidential product information.

At the centre of the dispute is Guru’s allegation that Pepsi, acting as a dominant direct-store delivery distributor in Canada, failed to provide a “fair share” of shelf space to Guru products. Instead, the company claims Pepsi disproportionately allocated retail space to its own and affiliated brands, undermining agreed growth targets.

Guru further alleges that during the wind-down of the partnership, Pepsi withheld inventory from retailers, creating out-of-stock situations while simultaneously requiring Guru to repurchase unsold product.

The lawsuit also raises concerns over intellectual property and confidentiality. Guru claims it shared detailed specifications for a new product, “Island Breeze,” under confidentiality provisions, only for Pepsi’s Rockstar Energy line to launch a similar product, “Island Bliss,” shortly before Guru’s planned release. The company is seeking recovery of profits generated by that product, with the amount to be determined through the court process.

In parallel with the civil case, Guru plans to file an application with the Canadian Competition Tribunal, requesting an inquiry into Pepsi’s conduct in the non-alcoholic beverage market.

The company argues that the case raises broader competition concerns, particularly around the use of distribution power and shelf allocation to disadvantage independent brands.

Pepsi has filed a separate claim seeking approximately $4.4 million in post-termination payables, including marketing spend reconciliations and inventory-related costs. Guru has stated it will fully contest the claim, adding that any potential liability is already accounted for in its 2025 financial statements and is not expected to impact future earnings.

The legal dispute follows the termination of an exclusive distribution agreement signed in 2021, under which Pepsi served as Guru’s sole distributor in Canada.

The agreement was terminated without cause in November 2024, with Guru completing its transition to a direct distribution model in May 2025.

According to the company, the shift has already delivered improved financial performance, including three consecutive EBITDA-positive quarters and record first-quarter revenue. Management argues this demonstrates the underlying strength of the brand and suggests that prior growth may have been constrained under the Pepsi distribution arrangement.

Guru has indicated it will provide further updates through regulatory filings, while maintaining focus on expanding distribution, advancing its zero-sugar product pipeline, and scaling its presence across North America.